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RAC calls for fuel price cut

Date: 13 June 2018   |   Author: Sean Keywood

Retailers should reduce petrol and diesel prices due to a fall in the wholesale cost of the fuels, according to the RAC.

The motoring organisation says that despite wholesale prices having dropped by between 2.5p and 3p since 22 May, drivers have suffered near-daily fuel price rises since 22 April, with the average price of a litre of petrol standing at 129.42p and a litre of diesel at 132.34p. 

According to the RAC, fuel prices are determined most significantly by the price of oil and by the sterling-to-US dollar exchange rate, with oil traded in the latter currency.

While May saw historic increases in the price of petrol - largely as a result of a barrel of oil peaking at $80 and sterling weakening against the dollar - since the latter part of last month the price of oil has been falling.

This has caused wholesale fuel prices to drop, which means retailers are paying less for petrol and diesel. 

RAC spokesperson Rod Dennis said: "Our data shows that it's high time retailers cut the price of petrol and diesel at the pumps - we see no good reason for them to wait before passing on savings they are benefiting from, which have been brought about by falling wholesale prices.

"Motorists really felt the impact of rising in prices in May, when the cost of filling up a petrol family car jumped by around £3.30 in a single month. We are now well into June and drivers are still waiting for some relief to rising prices.

"The oil price, together with the sterling/dollar exchange rate, is notoriously volatile, which means the price retailers pay when they buy fuel fluctuates regularly.

"But given how rapidly prices can go up when the wholesale price rises, it is not right that when wholesale prices fall many retailers seem to wait before making a headline-grabbing cut."

Dennis said that many of the biggest fuel retailers in the UK buy fuel on a daily basis, meaning they have been buying in fuel for less than they were just a few weeks' ago.

He said: "These price savings should be being passed on to motorists now - making incremental cuts would be fairer.

"In May we reported on the phenomenon of a daily 'fuel price creep' as the supermarkets and big fuel retailers appeared to be silently increasing the price of unleaded and diesel on their forecourts by a fraction of a pence every day.

"If this is their pricing strategy then to be fair to motorists we need to see it work in the same way in the opposite direction - rather than storing up wholesale price savings with no guarantee that motorists will feel the benefit of falling wholesale fuel prices."

Dennis warned that depending on events during the next fortnight, there remained a risk that oil prices could rise again. 

He added: "In such an instance the retailers are unlikely to pass on any savings they have banked during this period, but instead will start passing on future increases at the pump.

"Motorists are currently facing the highest fuel prices in more than three and a half years and those that have to fill up regularly will be feeling the impact on their monthly running costs.

"The price hike means they are also paying more in VAT on fuel, which is now 21.6p per litre on the UK average price for unleaded of 129.42p, on top of the 57.95p per litre which goes to the Treasury in fuel duty."